February 02, 2018

Following is information and insight from IHS Markit about 2017 global smartphone unit shipments.

Our analysis

Based on preliminary data from IHS Markit, global smartphone unit shipments declined by 4.5 percent in the fourth quarter of 2017 to 387.5 million units. Shipments of the full year grew 3.1 percent year over year, from 1.40 billion units to 1.44 billion units. Of the leading handset brands, only Xiaomi and Motorola experienced shipment growth in the fourth quarter of 2017.

Apple led the market in the fourth quarter of 2017, shipping 77.3 million units, which was 1.2 percent lower than the previous year. At second place finisher Samsung, shipments declined 2.2 percent, to reach 74.3 million units. Apple shipped 20 percent of all smartphones in the fourth quarter. Samsung followed Apple at 19 percent, which was down from 23 percent the previous quarter.

Apple’s iPhone X gained traction as soon as it became available to customers in November. New devices clearly helped Apple push its average selling price (ASP) to $796, which is $101 higher than the previous year. Even though the company sold fewer handsets in 2017, it was able to generate more revenue through new and higher-priced models.

Although Samsung’s shipments declined 2.2 percent year over year to 74.3 million units, the company improved its product mix in the middle and high-end ranges. However, Samsung had to spend more in marketing to sell its devices, which affected the profits for its IT and mobile communications division. The turn toward more value-added handsets helps Samsung avoid direct competition with Chinese players in low-end price segments, which often come with lower or even negative profit margins. Samsung is expected to unveil its S9 Galaxy S flagship model in February 2018, with sales starting in March. This timing is earlier than the S8, which launched in late March last year, with sales starting in April. The availability of a new flagship model in the first quarter should boost Samsung’s product mix and ASP.

Behind market leaders Apple and Samsung, Xiaomi continues its strong growth curve, which began in the second quarter of 2017. In the fourth quarter, the company shipped 28.2 million units, 89.2 percent more than it shipped a year ago. Driven by strong results in India, the company is further expanding its international footprint to increase growth. In the fourth quarter, the company officially entered the Spanish market. Xiaomi’s performance raised its share of global smartphone unit shipments, from 4 percent in 2016 to 7 percent in 2017.

As it did in the third quarter, Huawei followed Apple and Samsung, as shipments declined by 8.6 percent to 40.9 million units. This is the first time Huawei smartphone shipments contracted on a year-over-year basis. Huawei’s shipment level remained flat compared to last year, hovering between 10 percent and 11 percent of the market. The company’s international ambitions hit a roadblock in the US, as government opposition is closing the path to carrier partnerships for its flagship devices. Huawei shipped fewer than 200,000 units to the US in the fourth quarter, in a market dominated by Apple and Samsung. Even so, the US is an important market if Huawei wants to be recognized as a true global leader in the smartphone business.

OPPO smartphone shipments in the fourth quarter declined by 8 percent year over year, to 27.4 million units. Vivo recorded an even larger decline of 18 percent year over year, falling to 23.5 million units in the fourth quarter. Both companies were affected by the cooling Chinese market, which has been declining since the second half of 2017. Although both companies expanded business in Southeast and South Asian markets, competition also increased. For further growth, these two manufacturers must expand to other regions.

LG Electronics (LGE) shipments declined slightly by 1.4 percent, falling to 13.9 million units. Compared to other global manufacturers, LGE defended well against competitors, as sales of mid-tier segments increased. Still, the company is struggling to gain traction in high-end devices, since its competitors benefit from larger marketing budgets. The continued losses of its LGE Mobile Communications business unit forced the company to change how it will release new handsets in the future — focusing more on optimizing returns for each model, instead of maintaining the usual annual upgrade cycles.

A bright point for Lenovo was its Motorola line of smartphones. Shipments of Motorola-branded devices rose 39.5 percent over the previous year, reaching 11.4 million units in the fourth quarter. Motorola controlled 3 percent of shipments in the fourth quarter, compared to Lenovo, which fell to 1 percent of shipments. Lenovo will continue to phase out Lenovo-branded handsets, focusing exclusively on the Motorola brand in most markets.

ZTE, with 3 percent market share in the last quarter, posted a 42.5 percent year-over-year decline in shipments, falling to 10.6 million units in the fourth quarter of 2017. Unlike Huawei, ZTE was able to expand its ties to US carriers in the fourth quarter, launching the Axon M device at a high-profile event with AT&T. However, ZTE continues to focus on the mid-tier pricing segment, where competition remains strong across markets. While IHS Markit splits out shipments for the ZTE and Nubia brands, the combined total would still represent a 34 percent annual decline.

Many smartphone brands will experience changes in 2018. Google and HTC just completed their deal to transfer personnel and IP from HTC to Google, and LGE’s smartphone business will continue to drag down the company’s overall performance. Other brands also face hard decisions over the next few quarters.